Key insights
- DoorDash's Q1 revenue beat was overshadowed by a decline in GAAP net income and free cash flow, primarily due to the Deliveroo acquisition. While adjusted EBITDA increased, Deliveroo's lower take rate and amortization expenses negatively impacted profitability. The market may be overlooking these bottom-line concerns, but the long-term impact on DoorDash's financials warrants attention.
DoorDash's Q1 beat looks great until you look at the bottom line
I was digging through the new DASH Q1 print today. On the surface, the market loved it — the stock popped 12%, revenue crossed $4B for the first time (+33% Y/Y), and adjusted EBITDA jumped 28%. It basically looks like a clean beat-and-raise.
But there's a weird disconnect happening that jumped out at me.
If you look at the actual GAAP net income available to shareholders, it went down 5% (from $193M to $184M). Free cash flow also shrank 15%. So while the top line and adjusted numbers look amazing, the lines that actually matter for owners went backward.
The reason is the Deliveroo acquisition (Q1 was the first quarter where the deal hits the financials in full). It's dragging things down in a few ways:
- Take rate is compressing: Deliveroo has a structurally lower take rate. DoorDash's overall Net Revenue Margin fell to 12.8% (lowest in 5 quarters). 2. Massive amortization: Depreciation and amortization jumped 77% Y/Y (mostly Deliveroo's acquired intangibles running through the P&L). 3. Sinking contribution margins: Contribution profit as a % of GOV has fallen for two quarters straight to 4.4%.
To be fair, the legacy US DoorDash business is actually doing great (revenue up 21% ex-Deliveroo). But right now, we have a situation where a $164M Y/Y gain in adjusted EBITDA translates into a $9M decline in actual net income.
I wonder whether the market just ignored the effect from Diliveroo or the effect is overwhelmed by the strong beat and guidance. WDYT?
Full note of this ER analysis here: https://dullbusiness.substack.com/p/dash-q1-2026-revenue-up-33-eps-down